DeFi protocol tranchess raises $1.5 m in seed round led by three arrows, spartan

Money raised will go towards furthering the project's expansion while completing the development of its DAO.

Tranchess Protocol, a chess-themed DeFi asset management platform, has raised $1.5 million in a seed round led by Three Arrows Capital and Spartan Group.

Other notable investors include Binance Labs, Longhash Ventures, IMO Ventures, and key opinion leaders wishing to remain anonymous, according to a press release on Monday.

Money raised will go towards furthering the project’s expansion and aspirations of becoming a multi-chain solution while completing the development of its decentralized autonomous organization (DAO).

Tranchess, which has been under development for nearly a year, launched June 24 via Binance’s Smart Chain — an ecosystem designed for budding DeFi apps running smart contracts.

Three funds: Queen, Bishop, and Rook
Source: Tranchess

In essence, the protocol seeks to provide a risk/return matrix from a single main fund, known as Queen, that tracks a specific underlying crypto asset.

The protocol has begun by tracing bitcoin (BTC, -0.22%)‘s movements, with intentions of adding more assets further down the line. The fund will attempt to service a variety of clients with varying risk appetites because a user may split their fund into two sub-funds, Rook and Bishop, per the release.

Bishop, being a yielding tranche, has no exposure to bitcoin’s price while the Rook fund, being a leveraged tranche, has twice the exposure to price movements in the underlying crypto.

Once a user splits up their Queen fund into these sub-funds, users can then sell one fund instantaneously leaving them with either a fixed income or leveraged exposure to bitcoin, a spokesperson for the project told CoinDesk via Telegram.

“The main fund, Queen, currently tracks bitcoin and can be split into 0.5 Bishop tokens and 0.5 Rook tokens,” said the spokesperson.”Bishop tokens purely earn more yield and does not track bitcoin at all, while Rook tokens earn smaller yield but are essentially a 2x leverage token for bitcoin.”

Its chess-inspired theme borrows from some concepts of the game including the implementation of game theory of the Bishop interest voting system allowing users to vote on how much interest is generated in the fund. Meanwhile, the governance token — used to cast votes and make decisions regarding the protocol — is named Chess.

“We believe the yields offered to both bitcoin and stablecoin-denominated investors via this unique way of matching will find tremendous product-market fit,” said Su Zhu, co-founder of Three Arrows Capital.

The project said it was aiming to hand over management of the protocol to the DAO by Q4, 2021 along with accompanying 2.0 apps.